Cinemax India Ltd is tapping the capital markets with its public issue of 89.20 lakh shares in a price-band of Rs 135-Rs 155 to raise between Rs 120 crore and Rs 128 crore.
Cinemax India Ltd is tapping the capital markets with its public issue of 89.20 lakh shares in a price-band of Rs 135-Rs 155 to raise between Rs 120 crore and Rs 128 crore. On a fully diluted basis, this would constitute a dilution of 31.86%. The issue closes on January 23, 2007. The company is in the business of cinema exhibition and also malls.
Cinemax has retrofitted its three single screen theatres into multiplex screens in three years .
The company owns 33 screens that have a combined seating capacity of 9,220 seats. Cinemax has a major advantage over its competitors in terms of cost per seat. They are developers and their expertise in this area helps them reduce costs compared to its competitors by about 25%.
The money being raised would primarily be used for opening new screens, where Maharashtra, especially Mumbai, will be in focus. Mumbai, as a city, contributes 15% of national cinema revenue. Cinemax operates nine theatres with 30 screens in Mumbai, while their closest competitor operates 19 screens.
The company plans to construct a mall in Nagpur where there would be one lakh sq ft available for its mall and 30,000 sq ft would constitute the multiplex. This area of the mall is owned by the company.
The area could at a later date be sold and the money will be used for opening new screens if the opportunity arose.
The gaming concept has picked up very well and the same is being demonstrated at the Thane theatre where the passage area is also being used for gaming. It is not only profitable but ensures that people and activity are there at all times, keeping the place vibrant.
The average revenues per ticket have been increasing consistently from Rs 86 per ticket in FY2005 to Rs 120 in the first half of the financial year ended September 2006. The average spend on food and beverages during this period have also increased from Rs 20 to Rs 26.
The growth in this sector looks promising in the future as the content available has improved not only in quality but in the total availability as well.
The quality of theaters improving helps in creating a better viewing experience and helps in attracting people to the theatre.
The company will in the next 30 months have 108 new screens and this would increase their number of seats by almost 27,000. This would bring the total number of screens to 141 and the number of seats to slightly over 36,000.
The dominance of West would continue with 85 screens followed by 31 in North and 16 in South. Considering the growth in disposable incomes and the attraction of malls and mutiplexes in giving a total experience, it looks a promising business going forward.
Investors with a medium-term outlook should subscribe to the IPO and expect to make anywhere between 70 to 80% of their investment in about six months.
Sebi disclaimer - I intend to subscribe to the IPO of the above company.
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